Operating Results For Second Quarter And First Six Months Of 2014 Announced By Realty Income

Operating Results For Second Quarter And First Six Months Of 2014 Announced By                                 Realty Income  PR Newswire  ESCONDIDO, Calif., July 24, 2014  ESCONDIDO, Calif., July 24, 2014 /PRNewswire/ -- Realty Income Corporation (Realty Income), The Monthly Dividend Company^® (NYSE: O), today announced operating results for the second quarter ended June 30, 2014. Access to this document is available at www.realtyincome.com. All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise.  Realty Income Corporation - The Monthly Dividend Company.  COMPANY HIGHLIGHTS:  For the quarter ended June 30, 2014 (as compared to the same quarterly period in 2013):    oRevenue increased 22.6% to $228.6 million as compared to $186.4 million   oNet income available to common stockholders per share was $0.23   oFFO available to common stockholders increased 21.1% to $142.4 million   oFFO per share increased 6.7% to $0.64   oAFFO available to common stockholders increased 22.1% to $141.2 million   oAFFO per share increased 8.5% to $0.64   oSame store rents increased 1.4% to $130.5 million   oPortfolio occupancy increased to 98.3% from 98.2%   oInvested $405.1 million in 73 new properties and properties under     development or expansion   oIncreased the monthly dividend in June for the 76^th time and for the     67^th consecutive quarter   oDividends paid per common share increased 0.6%   oGenerated net proceeds of $528.6 million in a 13.8 million share common     stock offering in April   oGenerated net proceeds of $346.6 million in a 3.875% senior unsecured     notes offering in June  Financial Results  Revenue Revenue, for the quarter ended June 30, 2014, increased 22.6% to $228.6 million as compared to $186.4million, for the same quarter in 2013. Revenue, for the six months ended June 30, 2014, increased 24.4% to $450.2 million as compared to $362.0 million, for the same period in 2013.  Net Income Available to Common Stockholders Net income available to common stockholders, for the quarter ended June 30, 2014, was $51.4million as compared to $46.0 million, for the same quarter in 2013. Net income per share, for the quarter ended June 30, 2014, was $0.23, which is unchangedfrom the same quarter in 2013.  Net income available to common stockholders, for the six months ended June 30, 2014, was $98.6million as compared to $108.7 million, for the same period in 2013. Net income per share, for the six months ended June 30, 2014, was $0.46 as compared to $0.59, for the same period in 2013. Net income available to common stockholders in the first six months of 2013 was impacted by an unusually large gain on sale of real estate, which represents $0.19 per share.  The calculation to determine net income for a real estate company includes impairments and/or gains from property sales. Impairments and/or gains on property sales vary from quarter to quarter. This variance can significantly impact net income and period to period comparisons.  Funds From Operations Available to Common Stockholders (FFO) FFO, for the quarter ended June 30, 2014, increased 21.1% to $142.4million as compared to $117.6 million, for the same quarter in 2013. FFO per share, for the quarter ended June 30, 2014, increased 6.7% to $0.64 as compared to $0.60, for the same quarter in 2013.  FFO, for the six months ended June 30, 2014, increased 25.1% to $276.9 million as compared to $221.3 million, for the same period in 2013. FFO per share, for the six months ended June 30, 2014, increased 7.5% to $1.29 as compared to $1.20, for the same period in 2013.  Adjusted Funds From Operations Available to Common Stockholders (AFFO) AFFO, for the quarter ended June 30, 2014, increased 22.1% to $141.2million as compared to $115.6 million, for the same quarter in 2013. AFFO per share, for the quarter ended June 30, 2014, increased 8.5% to $0.64 as compared to $0.59, for the same quarter in 2013.  AFFO, for the six months ended June 30, 2014, increased 24.7% to $273.8 million as compared to $219.5 million, for the same period in 2013. AFFO per share, for the six months ended June30, 2014, increased 7.6% to $1.28 as compared to $1.19, for the same period in 2013.  The company considers FFO and AFFO to be appropriate supplemental measures of a Real Estate Investment Trust's (REIT's) operating performance. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust's (NAREIT's) definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus impairments of real estate, reduced by gains on sales of investment properties and extraordinary items. FFO, for the first six months of 2013, has also been normalized to add back merger-related costs for the acquisition of ARCT. AFFO further adjusts FFO for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company's ongoing operating performance. See the reconciliations of net income available to common stockholders to FFO and AFFO on page six.  Dividend Information In June 2014, Realty Income announced the 67^th consecutive quarterly dividend increase, which is the 76^th increase in the amount of the dividend since the company's listing on the New York Stock Exchange in 1994. The annualized dividend amount, as of June 30, 2014, was approximately $2.194 per share. The amount of monthly dividends paid per share increased 0.6% to $0.547 in the second quarter of 2014 compared to $0.544 for the same period in 2013. In addition, through June 30, 2014, the company has paid 527 consecutive monthly dividends and over $3.0billion in total dividends since 1969. Realty Income has a dividend reinvestment and stock purchase program that can be accessed at www.realtyincome.com. The program is administered by Wells Fargo Shareowner Services.  Real Estate Portfolio Update  As of June 30, 2014, Realty Income's portfolio of freestanding, single-tenant properties consisted of 4,263 properties located in 49 states and Puerto Rico, leased to 228 commercial tenants doing business in 47 industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 10.6 years.  Portfolio Management Activities The company's portfolio of commercial real estate, owned primarily under 10- to 20-year net leases, continues to perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of June30, 2014, portfolio occupancy was 98.3% with 74 properties available for lease out of a total of 4,263 properties in the portfolio, as compared to 98.2% portfolio occupancy, or 68 properties available for lease, as of June 30, 2013.  Since March 31, 2014, when we reported 73 properties available for lease, we had 40 lease expirations, re-leased 37 properties and sold two properties. Of the 37 properties re-leased during the second quarter of 2014, 36 properties were re-leased to either existing or new tenants without vacancy, and one was re-leased to a new tenant after a period of vacancy. The annual new rent on these leases was $5.2 million, as compared to the previous rent on these same properties of $5.0 million.  Rent Increases During the quarter ended June 30, 2014, same store rents, on 2,774 properties under lease, increased 1.4% to $130.5million, as compared to $128.7million, for the same quarter in 2013. For the six months ended June 30, 2014, same store rents, on 2,774 properties under lease, increased 1.4% to $261.5million, as compared to $257.8million, for the same period in 2013.  Property Acquisitions During the second quarter of 2014, Realty Income invested $405.1 million in 73 new properties and properties under development or expansion, located in 27 states. These properties are 100% leased with a weighted average lease term of approximately 10.6 years and an initial average lease yield of 7.3%. The tenants occupying the new properties operate in 22 industries, and the property types consist of 75.9% retail, 14.6% office, 5.2% industrial and distribution, and 4.3% manufacturing, based on rental revenue. Approximately 55% of the revenue generated for acquisitions during the second quarter of 2014 is from investment grade tenants.  During the six months ended June 30, 2014, Realty Income invested approximately $1.06 billion in 402 new properties and properties under development or expansion. The new properties are located in 39 states and are 100% leased with a weighted average lease term of approximately 12.8 years and an initial average lease yield of 7.1%. The tenants occupying the new properties operate in 24 industries, and the property types consist of 83.0% retail, 8.5% office, 6.8% industrial and distribution, and 1.7% manufacturing, based on rental revenue. Approximately 73% of the revenue generated from the year-to-date 2014 acquisitions is from investment grade tenants.  Realty Income maintains a $1.5 billion unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. As of June 30, 2014, approximately $1.43 billion was available on the credit facility to fund additional acquisitions.  Property Dispositions During the quarter ended June 30, 2014, Realty Income sold six properties for $7.0million, with a gain on sales of $2.0million, as compared to 17 properties sold for $23.7 million, with a gain on sales of $5.7 million, during the same quarter in 2013.  During the six months ended June 30, 2014, Realty Income sold 17 properties for $19.7 million, with a gain on sales of $5.8 million, as compared to 34 properties sold for $83.7 million, with a gain on sales of $44.3 million, during the same period in 2013.  Other Activities  Issued 13.8 Million Shares in an Upsized Common Share Offering On April 1, 2014, Realty Income issued 13.8 million common shares, raising net proceeds of approximately $528.6million, which were used to repay a portion of the borrowings under the company's acquisition credit facility.  Direct Stock Purchase and Dividend Reinvestment Plan During the second quarter of 2014, Realty Income issued 1,174,837 common shares via its Plan, generating gross proceeds of approximately $52.1 million. During the first six months of 2014, Realty Income issued 1,240,305 common shares via its Plan, generating gross proceeds of approximately $54.4 million.  Issued $350 Million of 3.875% Senior Unsecured Notes Due 2024 On June 25, 2014, Realty Income issued $350 million of 3.875% senior unsecured notes due 2024. The public offering price for the notes was 99.956% of the principal amount for an effective yield to maturity of 3.88%. The net proceeds of approximately $346.6 million from the offering were used to repay a portion of the borrowings outstanding under the company's acquisition credit facility.  CEO Comments on Operating Results  Commenting on Realty Income's results and real estate operations, Chief Executive Officer, John P. Case, said,"We are pleased with our second quarter operating results as we continued to see healthy acquisition volumes and consistently positive performance in our portfolio. Our disciplined and selective investment strategy continued to drive earnings and dividend growth. FFO per share increased by 6.7% to $0.64 and AFFO per share increased 8.5% to $0.64. With the payment of our June 2014 dividend, we achieved a company milestone, surpassing $3 billion in dividends paid to our shareholders over the company's 45-year operating history."  "During the quarter, we completed $405.1 million in acquisitions at an initial average lease yield of 7.3% and a weighted average lease term of 10.6 years. Our investment activity this quarter was balanced between our two principal investment segments: non-investment grade retail properties which accounted for more than 40% of acquisitions and investment grade retail/non-retail properties. Of the total acquisitions this quarter, $228.6 million represented the remaining balance of the previously announced transaction with Inland Diversified Real Estate Trust, Inc. The $503 million Inland transaction is now closed in its entirety. This year we have completed $1.06 billion in property level acquisitions, which is a record amount for the first half of any year in the company's history. Our investment spreads remain well above their historical averages."  "Our occupancy at the end of the second quarter was 98.3%, and our year-to-date same store rent increased by 1.4% from the same period a year ago. Our portfolio remains quite diversified with no tenant, industry, or state accounting for more than 5.2%, 10.2% or 10.3% of rental revenue, respectively."  "To support our growth activities, we raised just under $1 billion in permanent and long-term capital during the quarter. At the end of the quarter, we had a $70 million balance on the credit facility giving the company more than $1.4 billion available to fund future investment activity."  "Given our robust level of acquisitions during the first half of the year, we now estimate our 2014 acquisitions will be approximately $1.4 billion versus our previous estimate of $1.2 billion. With this year-to-date acquisition activity and the improved visibility we have on our operations, we are raising our 2014 FFO per share guidance from $2.53 - $2.58 to $2.59 - $2.62. We are also tightening and raising the midpoint of our 2014 AFFO per share guidance from $2.53 - $2.58 to $2.55 - $2.57."  FFO and AFFO Commentary Realty Income's FFO and AFFO per share has historically tended to be stable and fairly predictable because of the long-term leases that are the primary source of the company's revenue. There are, however, several factors that can cause FFO and AFFO per share to vary from levels that have been anticipated by the company. These factors include, but are not limited to, changes in interest rates and occupancy rates, periodically accessing the capital markets, the level and timing of property and entity acquisitions and dispositions, lease rollovers, the general real estate market, and the economy.  2014 Earnings Estimates FFO per share for 2014 should range from $2.59 to $2.62, an increase of 7.5% to 8.7% over 2013 FFO (normalized to exclude 2013 ARCT merger-related costs) per share of $2.41. FFO per share for 2014 is based on a net income per share range of $0.90 to $0.93, plus estimated real estate depreciation of $1.74 per share, and reduced by potential estimated gains on sales of investment properties of $0.05 per share (in accordance with NAREIT's definition of FFO).  AFFO per share for 2014 should range from $2.55 to $2.57, an increase of 5.8% to 6.6% over the 2013 AFFO per share of $2.41. AFFO further adjusts FFO for unique revenue and expense items, which are not as pertinent to the measurement of the company's ongoing operating performance.  About Realty Income Realty Income is The Monthly Dividend Company^®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. As of June 30, 2014, the company had paid 527 consecutive monthly dividends throughout its 45-year operating history. The monthly income is supported by the cash flows from over 4,200 properties owned under long-term lease agreements with 228 leading regional and national commercial tenants. The company is an active buyer of net-leased properties nationwide. Additional information about the company can be obtained from the corporate website at www.realtyincome.com or www.twitter.com/realtyincome.  Forward-Looking Statements Statements in this press release that are not strictly historical are "forward-looking" statements. Forward-looking statements involve known and unknown risks, which may cause the company's actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, tenant financial health, the availability of capital to finance planned growth, continued volatility and uncertainty in the credit markets and broader financial markets, property acquisitions and the timing of these acquisitions, charges for property impairments, and the outcome of any legal proceedings to which the company is a party, as described in the company's filings with the Securities and Exchange Commission. Consequently, forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.  Note to Editors: Realty Income press releases are available via the internet at http://www.realtyincome.com/invest/newsroom-library/press-releases.shtml.  CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts - unaudited)                  Three         Three             Six Months    Six Months                  Months        Months                  Ended         Ended             Ended         Ended                  6/30/14       6/30/13           6/30/14       6/30/13 REVENUE Rental           $ 221,868     $ 180,089         $ 435,989     $ 347,887 Tenant             6,169         4,485             12,597        10,512 reimbursements Other              609           1,869             1,632         3,566 Total revenue      228,646       186,443           450,218       361,965 EXPENSES Depreciation and                92,894        73,906            182,864       140,655 amortization Interest           52,712        39,232            104,432       80,831 General and        11,587        12,088            24,473        23,716 administrative Property (including         10,127        7,754             20,704        17,326 reimbursable) Income taxes       570           624               1,661         1,201 Provisions for     499           290               2,182         290 impairment Merger-related     -             605               -             12,635 costs Total expenses     168,389       134,499           336,316       276,654 Gain on sales      1,964         -                 3,236         - of real estate Income from continuing         62,221        51,944            117,138       85,311 operations Income from discontinued       20            4,572             3,097         44,432 operations Net income         62,241        56,516            120,235       129,743 Net income attributable to    (339)         (77)              (671)         (86) noncontrolling interests Net income attributable to    61,902        56,439            119,564       129,657 the Company Preferred stock    (10,482)      (10,482)          (20,965)      (20,965) dividends Net income available to     $ 51,420      $ 45,957          $ 98,599      $ 108,692 common stockholders Funds from operations available to common stockholders     $ 142,409     $ 117,565  ^(1)   $ 276,910     $ 221,253  ^(1) (FFO) Adjusted funds from operations available to common stockholders     $ 141,178     $ 115,584         $ 273,822     $ 219,547 (AFFO) Per share information for common stockholders: Income from continuing operations, basic and        $ 0.23        $ 0.21            $ 0.45        $ 0.35 diluted Net income, basic and        $ 0.23        $ 0.23            $ 0.46        $ 0.59 diluted FFO, basic and   $ 0.64        $ 0.60     ^(1)   $ 1.29        $ 1.20     ^(1) diluted AFFO: Basic            $ 0.64        $ 0.59            $ 1.28        $ 1.20 Diluted          $ 0.64        $ 0.59            $ 1.28        $ 1.19 Cash dividends paid per common  $ 0.547       $ 0.544           $ 1.094       $ 1.057 share ^(1) Normalized to exclude ARCT merger-related costs  FUNDS FROM OPERATIONS (FFO) (dollars in thousands, except per share amounts)                       Three Months    Three         Six Months    Six Months                                       Months                       Ended 6/30/14   Ended         Ended         Ended                                       6/30/13       6/30/14       6/30/13 Net income available to common             $    51,420     $  45,957     $   98,599    $  108,692 stockholders Depreciation and amortization:       Continuing           92,894        73,906         182,864      140,655       operations       Discontinued         -             632            -            1,146       operations Depreciation of furniture, fixtures        (104)         (67)           (196)        (128) and equipment Provisions for impairment on investment properties:       Continuing           499           290            2,182        290       operations       Discontinued         -             2,206          -            2,662       operations Gain on sale of investment properties:       Continuing           (1,964)       -              (3,236)      -       operations       Discontinued         -             (5,744)        (2,607)      (44,304)       operations Merger-related costs       -             605            -            12,635 ^(1) FFO adjustments allocable to               (336)         (220)          (696)        (395) noncontrolling interests FFO available to      $    142,409    $  117,565    $   276,910   $  221,253 common stockholders FFO per common share  $    0.64       $  0.60       $   1.29      $  1.20 Distributions paid to common             $    121,229    $  106,692    $   234,643   $  191,669 stockholders FFO in excess of distributions paid to common stockholders   $    21,180     $  10,873     $   42,267    $  29,584 Weighted average number of common shares used for FFO:       Basic           220,979,955     195,574,014   214,039,692   183,714,191       Diluted         221,043,619     195,759,091   214,089,629   183,873,647 ^(1)  FFO for the three and six months ended June 30, 2013, has       been normalized to exclude ARCT merger-related costs. We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trust's definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus impairments of real estate assets, reduced by gains on sales of investment properties and extraordinary items. ADJUSTED FUNDS FROM OPERATIONS (AFFO) (dollars in thousands, except per share amounts) We define AFFO as FFO adjusted for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company's ongoing operating performance. Most companies in our industry use a similar measurement to AFFO, but they may use the term "CAD" (for Cash Available for Distribution) or "FAD" (for Funds Available for Distribution).                       Three Months    Three         Six Months    Six Months                                       Months                       Ended 6/30/14   Ended         Ended         Ended                                       6/30/13       6/30/14       6/30/13 Net income available to common             $    51,420     $  45,957     $   98,599    $  108,692 stockholders Cumulative adjustments to             90,989        71,608         178,311      112,561 calculate FFO ^(1) FFO available to           142,409       117,565        276,910      221,253 common stockholders Amortization of share-based                2,752         3,653          5,449        7,498 compensation Amortization of deferred financing         1,165         1,015          2,241        2,021 costs ^(2) Amortization of net        (3,009)       (2,494)        (5,394)      (4,441) mortgage premiums (Gain) loss on             984           (1,738)        1,042        (1,286) interest rate swaps Capitalized leasing costs and                  (275)         (361)          (467)        (774) commissions Capitalized building       (1,090)       (1,255)        (2,267)      (2,520) improvements Straight-line rent         (3,977)       (3,250)        (7,913)      (6,454) Amortization of above and                  2,213         2,429          4,207        4,223 below-market leases AFFO adjustments allocable to               6             20             14           27 noncontrolling interests AFFO available to     $    141,178    $  115,584    $   273,822   $  219,547 common stockholders AFFO per common share:       Basic           $    0.64       $  0.59       $   1.28      $  1.20       Diluted         $    0.64       $  0.59       $   1.28      $  1.19 Distributions paid to common             $    121,229    $  106,692    $   234,643   $  191,669 stockholders AFFO in excess of distributions paid to common stockholders   $    19,949     $  8,892      $   39,179    $  27,878 Weighted average number of common shares used for AFFO:       Basic           220,979,955     195,574,014   214,039,692   183,714,191       Diluted         221,043,619     195,759,091   214,089,629   183,873,647 ^(1)  See FFO calculation above for reconciling items.       Includes the amortization of costs incurred and capitalized when our       notes were issued in March 2003, November 2003, March 2005, September       2005, September 2006, September 2007, June 2010, June 2011, October       2012, July 2013 and June 2014. Additionally, this includes the ^(2)  amortization of deferred financing costs incurred and capitalized in       connection with our assumption of our mortgages payable and the issuance       of our term loan. The deferred financing costs are being amortized over       the lives of the respective mortgages and term loan. No costs associated       with our credit facility agreements or annual fees paid to credit rating       agencies have been included.  HISTORICAL FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS (dollars in thousands, except per share amounts) For the three months ended      2014         2013         2012         2011         2010 June 30, Net income available to   $  51,420    $  45,957    $  32,950    $  33,185    $  24,985 common stockholders Depreciation and               92,790       74,471       35,571       29,000       23,469 amortization Provisions for impairment on     499          2,496        -            10           53 investment properties Gain on sales of investment        (1,964)      (5,744)      (3,354)      (1,251)      (1,663) properties Merger-related    -            605          -            -            - costs FFO adjustments allocable to      (336)        (220)        -            -            - noncontrolling interests FFO ^(1)       $  142,409   $  117,565   $  65,167    $  60,944    $  46,844 FFO per diluted share  $  0.64      $  0.60      $  0.49      $  0.48      $  0.45 ^(1) AFFO           $  141,178   $  115,584   $  66,499    $  62,370    $  47,730 AFFO per       $  0.64      $  0.59      $  0.50      $  0.49      $  0.46 diluted share Cash dividends $  0.547     $  0.544     $  0.437     $  0.434     $  0.430 paid per share Weighted average        221,043,619  195,759,091  132,828,540  126,202,047  103,765,828 diluted shares outstanding For the six months ended      2014         2013         2012         2011         2010 June 30, Net income available to   $  98,599    $  108,692   $  59,022    $  63,120    $  49,127 common stockholders Depreciation and               182,668      141,673      70,806       55,791       46,682 amortization Provisions for impairment on     2,182        2,952        -            210          87 investment properties Gain on sales of investment        (5,843)      (44,304)     (3,965)      (1,379)      (2,366) properties Merger-related    -            12,635       -            -            - costs AFFO adjustments allocable to      (696)        (395)        -            -            - noncontrolling interests FFO ^(1)       $  276,910   $  221,253   $  125,863   $  117,742   $  93,530 FFO per diluted share  $  1.29      $  1.20      $  0.95      $  0.96      $  0.90 ^(1) AFFO           $  273,822   $  219,547   $  132,793   $  120,610   $  95,344 AFFO per       $  1.28      $  1.19      $  1.00      $  0.98      $  0.92 diluted share Cash dividends $  1.094     $  1.057     $  0.874     $  0.866     $  0.859 paid per share Weighted average        214,089,629  183,873,647  132,785,213  122,691,418  103,778,609 diluted shares outstanding  ^(1) FFO for the three and six months ended June 30, 2013, has been normalized      to exclude ARCT merger-related costs.  REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 2014 and December 31, 2013 (dollars in thousands, except per share data)                                                    2014           2013 ASSETS                                             (unaudited) Real estate, at cost: Land                                             $ 2,991,946    $ 2,791,147 Buildings and improvements                         7,869,046      7,108,328 Total real estate, at cost                         10,860,992     9,899,475 Less accumulated depreciation and amortization     (1,249,461)    (1,114,888) Net real estate held for investment                9,611,531      8,784,587 Real estate held for sale, net                     9,598          12,022 Net real estate                                    9,621,129      8,796,609 Cash and cash equivalents                          8,908          10,257 Accounts receivable, net                           43,751         39,323 Acquired lease intangible assets, net              1,048,139      935,459 Goodwill                                           15,556         15,660 Other assets, net                                  74,919         127,133 Total assets                                     $ 10,812,402   $ 9,924,441 LIABILITIES AND EQUITY Distributions payable                            $ 44,353       $ 41,452 Accounts payable and accrued expenses              98,973         102,511 Acquired lease intangible liabilities, net         174,769        148,250 Other liabilities                                  36,682         44,030 Line of credit payable                             70,800         128,000 Term loan                                          70,000         70,000 Mortgages payable, net                             916,454        783,360 Notes payable, net                                 3,535,957      3,185,480 Total liabilities                                  4,947,988      4,503,083 Commitments and contingencies Stockholders' equity: Preferred stock and paid in capital, par value $0.01 per share, 69,900,000 shares authorized and 25,150,000 shares issued and outstanding as of June 30, 2014 and December 31,   609,363        609,363 2013 Common stock and paid in capital, par value $0.01 per share, 370,100,000 shares authorized, 222,623,256 shares issued and outstanding as of June 30, 2014 and 207,485,073 shares issued and outstanding at December 31, 2013               6,357,084      5,767,878 Distributions in excess of net income              (1,130,746)    (991,794) Total stockholders' equity                         5,835,701      5,385,447 Noncontrolling interests                           28,713         35,911 Total equity                                       5,864,414      5,421,358 Total liabilities and equity                     $ 10,812,402   $ 9,924,441    Realty Income Performance vs. Major Stock Indices                                Equity                                                         NASDAQ            Realty Income       REIT Index ^(1)      DJIA                 S&P 500              Composite            Dividend  Total     Dividend  Total      Dividend  Total      Dividend  Total      Dividend  Total            yield     return    yield     return     yield     return     yield     return     yield     return                      ^(2)                ^(3)                 ^(3)                 ^(3)                 ^(4) 10/18 to   10.5  %   10.8   %  7.7   %   0.0     %  2.9   %   (1.6%)     2.9   %   (1.2%)     0.5   %   (1.7%) 12/31/1994 1995       8.3   %   42.0   %  7.4   %   15.3    %  2.4   %   36.9    %  2.3   %   37.6    %  0.6   %   39.9    % 1996       7.9   %   15.4   %  6.1   %   35.3    %  2.2   %   28.9    %  2.0   %   23.0    %  0.2   %   22.7    % 1997       7.5   %   14.5   %  5.5   %   20.3    %  1.8   %   24.9    %  1.6   %   33.4    %  0.5   %   21.6    % 1998       8.2   %   5.5    %  7.5   %   (17.5%)    1.7   %   18.1    %  1.3   %   28.6    %  0.3   %   39.6    % 1999       10.5  %   (8.7%)    8.7   %   (4.6%)     1.3   %   27.2    %  1.1   %   21.0    %  0.2   %   85.6    % 2000       8.9   %   31.2   %  7.5   %   26.4    %  1.5   %   (4.7%)     1.2   %   (9.1%)     0.3   %   (39.3%) 2001       7.8   %   27.2   %  7.1   %   13.9    %  1.9   %   (5.5%)     1.4   %   (11.9%)    0.3   %   (21.1%) 2002       6.7   %   26.9   %  7.1   %   3.8     %  2.6   %   (15.0%)    1.9   %   (22.1%)    0.5   %   (31.5%) 2003       6.0   %   21.0   %  5.5   %   37.1    %  2.3   %   28.3    %  1.8   %   28.7    %  0.6   %   50.0    % 2004       5.2   %   32.7   %  4.7   %   31.6    %  2.2   %   5.6     %  1.8   %   10.9    %  0.6   %   8.6     % 2005       6.5   %   (9.2%)    4.6   %   12.2    %  2.6   %   1.7     %  1.9   %   4.9     %  0.9   %   1.4     % 2006       5.5   %   34.8   %  3.7   %   35.1    %  2.5   %   19.0    %  1.9   %   15.8    %  0.8   %   9.5     % 2007       6.1   %   3.2    %  4.9   %   (15.7%)    2.7   %   8.8     %  2.1   %   5.5     %  0.8   %   9.8     % 2008       7.3   %   (8.2%)    7.6   %   (37.7%)    3.6   %   (31.8%)    3.2   %   (37.0%)    1.3   %   (40.5%) 2009       6.6   %   19.3   %  3.7   %   28.0    %  2.6   %   22.6    %  2.0   %   26.5    %  1.0   %   43.9    % 2010       5.1   %   38.6   %  3.5   %   27.9    %  2.6   %   14.0    %  1.9   %   15.1    %  1.2   %   16.9    % 2011       5.0   %   7.3    %  3.8   %   8.3     %  2.8   %   8.3     %  2.3   %   2.1     %  1.3   %   (1.8%) 2012       4.5   %   20.1   %  3.5   %   19.7    %  3.0   %   10.2    %  2.5   %   16.0    %  2.6   %   15.9    % 2013       5.8   %   (1.8%)    3.9   %   2.9     %  2.3   %   29.6    %  2.0   %   32.4    %  1.4   %   38.3    % Q2 YTD     4.9   %   21.9   %  3.5   %   16.2    %  2.3   %   2.7     %  2.0   %   7.1     %  1.2   %   5.5     % 2014 Compounded Average                      17.0   %            11.1    %            10.2    %            9.6     %            9.3     % Annual Total Return ^(5) Note: All of these dividend yields are calculated as annualized dividends based on the last dividend paid in applicable time period divided by the closing price as of period end. Dividend yield sources: NAREIT website and Bloomberg, except for the 1994 NASDAQ dividend yield which was sourced from Datastream / Thomson Financial. ^(1)    FTSE NAREIT US Equity REIT Index, as per NAREIT website.         Calculated as the difference between the closing stock price as of period end less the closing stock ^(2)    price as of previous period, plus dividends paid in period, divided by closing stock price as of end of         previous period. Does not include reinvestment of dividends for the annual percentages. ^(3)    Includes reinvestment of dividends. Source: NAREIT website and Factset. ^(4)    Price only index, does not include dividends. Source: Factset.         All of these Compounded Average Annual Total Return rates are calculated in the same manner: from Realty         Income's NYSE listing on October 18, 1994 through June 30, 2014, and (except for NASDAQ) assuming ^(5)    reinvestment of dividends. Past Performance does not guarantee future performance. Realty Income         presents this data for informational purposes only and makes no representation about its future         performance or how it will compare in performance to other indices in the future.    Property Type Diversification The following table sets forth certain property type information regarding Realty Income's property portfolio as of June 30, 2014 (dollars in thousands):                                               Rental            Percentage                                  Approximate    Revenue for       of                    Number of               the Quarter       Rental                                  Leasable       Ended Property Type      Properties     Square      June 30,     ^(1) Revenue                                  Feet           2014 Retail             4,102         45,327,100     $   172,153       77.7       % Industrial and     86            16,278,800         23,463        10.6 distribution Office             46            3,519,900          15,004        6.8 Manufacturing      14            3,875,200          5,607         2.5 Agriculture        15            184,500            5,209         2.4 Totals             4,263         69,185,500     $   221,436       100.0      %            Includes rental revenue for all properties owned by Realty Income            at June 30, 2014, including revenue from properties reclassified ^(1)       as discontinued operations of $18. Excludes revenue of $44 from            properties owned by Crest and $406 from sold properties that were            included in continuing operations.    Tenant Diversification The largest tenants based on percentage of total portfolio rental revenue at June 30, 2014 include the following: Tenant                            Number of                     % of Revenue                                   Properties Walgreens                         111                           5.2       % FedEx                             38                            5.0       % Dollar General                    502                           5.0       % LA Fitness                        45                            4.6       % Family Dollar                     450                           4.5       % BJ's Wholesale Clubs              15                            2.9       % AMC Theatres                      20                            2.8       % Diageo                            17                            2.7       % Northern Tier Energy/Super        134                           2.3       % America Regal Cinemas                     20                            2.1       % Rite Aid                          58                            2.0       % CVS Pharmacy                      49                            1.9       % The Pantry                        145                           1.7       % Circle K                          150                           1.6       % Walmart/Sam's Club                19                            1.5       % GPM Investments/Fas Mart          141                           1.4       % NPC International                 202                           1.4       % TBC Corporation                   70                            1.3       % Smart & Final                     36                            1.2       % FreedomRoads/Camping World        18                            1.2       %    Industry Diversification The following table sets forth certain information regarding Realty Income's property portfolio classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:                    Percentage of Rental Revenue^(1)                    For the                    Quarter     For the Years Ended                    Ended                    June 30,    Dec 31,  Dec     Dec     Dec     Dec     Dec                                         31,     31,     31,     31,     31,                    2014        2013     2012    2011    2010    2009    2008 Retail industries Apparel stores     1.9    %    1.9   %  1.7  %  1.4  %  1.2  %  1.1  %  1.1  % Automotive         0.8         0.8      1.1     0.9     1.0     1.1     1.0 collision services Automotive parts   1.2         1.2      1.0     1.2     1.4     1.5     1.6 Automotive service 1.8         2.1      3.1     3.7     4.7     4.8     4.8 Automotive tire    3.2         3.6      4.7     5.6     6.4     6.9     6.7 services Book stores        *           *        0.1     0.1     0.1     0.2     0.2 Child care         2.3         2.8      4.5     5.2     6.5     7.3     7.6 Consumer           0.3         0.3      0.5     0.5     0.6     0.7     0.8 electronics Convenience stores 10.2        11.2     16.3    18.5    17.1    16.9    15.8 Crafts and         0.5         0.5      0.3     0.2     0.3     0.3     0.3 novelties Dollar stores      9.8         6.2      2.2     -       -       -       - Drug stores        9.5         8.1      3.5     3.8     4.1     4.3     4.1 Education          0.4         0.4      0.7     0.7     0.8     0.9     0.8 Entertainment      0.6         0.6      0.9     1.0     1.2     1.3     1.2 Equipment services 0.1         0.1      0.1     0.2     0.2     0.2     0.2 Financial services 1.4         1.5      0.2     0.2     0.2     0.2     0.2 General            1.2         1.1      0.6     0.6     0.8     0.8     0.8 merchandise Grocery stores     3.0         2.9      3.7     1.6     0.9     0.7     0.7 Health and fitness 7.0         6.3      6.8     6.4     6.9     5.9     5.6 Health care        1.1         1.1      -       -       -       -       - Home furnishings   0.7         0.9      1.0     1.1     1.3     1.3     2.4 Home improvement   1.3         1.6      1.5     1.7     2.0     2.2     2.1 Jewelry            0.1         0.1      -       -       -       -       - Motor vehicle      1.5         1.6      2.1     2.2     2.6     2.7     3.2 dealerships Office supplies    0.4         0.5      0.8     0.9     0.9     1.0     1.0 Pet supplies and   0.7         0.8      0.6     0.7     0.9     0.9     0.8 services Restaurants -      4.3         5.1      7.3     10.9    13.4    13.7    14.3 casual dining Restaurants -      3.5         4.4      5.9     6.6     7.7     8.3     8.2 quick service Shoe stores        0.1         0.1      0.1     0.2     0.1     -       - Sporting goods     1.7         1.7      2.5     2.7     2.7     2.6     2.3 Theaters           5.2         6.2      9.4     8.8     8.9     9.2     9.0 Transportation     0.1         0.1      0.2     0.2     0.2     0.2     0.2 services Wholesale clubs    4.2         3.9      3.2     0.7     -       -       - Other              0.1         0.1      0.1     0.1     0.3     1.1     1.2 Retail industries  80.2   %    79.8  %  86.7 %  88.6 %  95.4 %  98.3 %  98.2 %    Industry Diversification (continued)                         Percentage of Rental Revenue^(1)                         For the                         Quarter    For the Years Ended                         Ended                         June 30,   Dec 31,  Dec 31,  Dec 31,  Dec 31,  Dec 31,  Dec 31,                         2014       2013     2012     2011     2010     2009     2008      Non-retail      industries      Aerospace          1.2        1.2      0.9      0.5      -        -        -      Beverages          2.8        3.3      5.1      5.6      3.0      -        -      Consumer           0.5        0.6      0.1      -        -        -        -      appliances      Consumer goods     0.9        1.0      0.1      -        -        -        -      Crafts and         0.1        0.1      -        -        -        -        -      novelties      Diversified        0.5        0.2      0.1      -        -        -        -      industrial      Electric utilities 0.1        *        -        -        -        -        -      Equipment services 0.5        0.4      0.3      0.2      -        -        -      Financial services 0.4        0.5      0.4      0.3      -        -        -      Food processing    1.4        1.5      1.3      0.7      -        -        -      General            0.4        -        -        -        -        -        -      merchandise      Government         1.3        1.4      0.1      0.1      0.1      0.1      -      services      Health care        0.7        0.8      *        *        -        -        -      Home furnishings   0.2        0.2      -        -        -        -        -      Home improvement   0.1        -        -        -        -        -        -      Insurance          0.1        0.1      *        -        -        -        -      Machinery          0.1        0.2      0.1      -        -        -        -      Other              0.7        0.6      -        -        -        -        -      manufacturing      Packaging          0.8        0.9      0.7      0.4      -        -        -      Paper              0.1        0.2      0.1      0.1      -        -        -      Shoe stores        0.8        0.9      -        -        -        -        -      Telecommunications 0.7        0.7      0.8      0.7      -        -        -      Transportation     5.1        5.3      2.2      1.6      -        -        -      services      Other              0.3        0.1      1.0      1.2      1.5      1.6      1.8      Non-retail         19.8  %    20.2  %  13.3  %  11.4  %  4.6   %  1.7   %  1.8   %      industries      Totals             100.0 %    100.0 %  100.0 %  100.0 %  100.0 %  100.0 %  100.0 % *    Less than 0.1%      Includes rental revenue for all properties owned by Realty Income at the end of ^(1) each period presented, including revenue from properties reclassified as      discontinued operations. Excludes revenue from properties owned by Crest Net      Lease, Inc., or Crest.    Lease Expirations The following table sets forth certain information regarding Realty Income's property portfolio regarding the timing of the lease term expirations (excluding rights to extend a lease at the option of the tenant) on our 4,169 net leased, single-tenant properties as of June 30, 2014 (dollars in thousands): Total Portfolio^(1)                                               Initial Expirations^(3)        Subsequent Expirations^(4)                                        Rental                              Rental                         Rental                                        Revenue                             Revenue                        Revenue                                        for the                             for the                        for the        Number                          Quarter          % of               Quarter     % of              Quarter    % of        of Leases            Approx.    Ended            Total     Number   Ended       Total     Number   Ended      Total         Expiring          Leasable   Jun 30,          Rental    of       Jun 30,     Rental    of       Jun 30,    Rental                                                                   Leases                         Leases Year    Retail  Non-Retail  Sq. Feet   2014       ^(2) Revenue   Expiring 2014        Revenue   Expiring 2014       Revenue 2014    85      -           634,100     $ 2,045         1.0     % 22        $ 795      0.4     % 63        $ 1,250   0.6     % 2015    172     -           866,600       3,693         1.7       67          1,520    0.7       105         2,173   1.0 2016    201     1           1,220,100     4,629         2.1       121         2,835    1.3       81          1,794   0.8 2017    187     2           2,116,500     6,031         2.8       49          3,050    1.4       140         2,981   1.4 2018    273     10          3,480,500     10,881        5.0       165         7,658    3.5       118         3,223   1.5 2019    214     11          3,599,800     11,619        5.3       167         10,001   4.6       58          1,618   0.7 2020    108     12          3,706,300     9,616         4.4       105         8,875    4.1       15          741     0.3 2021    184     13          5,487,900     14,332        6.6       187         13,780   6.3       10          552     0.3 2022    220     19          7,529,200     15,391        7.0       223         14,978   6.8       16          413     0.2 2023    344     22          6,561,600     20,875        9.5       353         20,203   9.2       13          672     0.3 2024    154     11          2,816,200     8,606         3.9       164         8,570    3.9       1           36      * 2025    296     10          4,201,900     18,124        8.3       299         17,873   8.2       7           251     0.1 2026    233     5           3,514,700     12,651        5.7       235         12,568   5.7       3           83      * 2027    462     2           4,901,800     16,080        7.4       462         16,040   7.4       2           40      * 2028    282     5           5,989,800     16,082        7.3       285         16,027   7.3       2           55      * 2029 -  596     35          10,966,500    48,241        22.0      623         48,034   21.9      8           207     0.1 2043 Totals  4,011   158         67,593,500  $ 218,896       100.0   % 3,527     $ 202,807  92.7    % 642       $ 16,089  7.3     % *     Less than 0.1% ^(1)  Excludes 20 multi-tenant properties and 74 vacant properties, one of which is a multi-tenant property. The lease       expirations for properties under construction are based on the estimated date of completion of those properties.       Includes rental revenue of $18 from properties reclassified as discontinued operations and excludes revenue of $2,540 ^(2)  from 20 multi-tenant properties and from 74 vacant properties at June 30, 2014, $406 from sold properties included in       continuing operations and $44 from properties owned by Crest. ^(3)  Represents leases to the initial tenant of the property that are expiring for the first time. ^(4)  Represents lease expirations on properties in the portfolio, which have previously been renewed, extended or       re-tenanted.    Geographic Diversification The following table sets forth certain state-by-state information regarding Realty Income's property portfolio as of June 30, 2014 (dollars in thousands):                                                       Rental         Percentage                                          Approximate  Revenue        of                                                       for                                                       the                     Number of  Percent   Leasable     Quarter        Rental                                                       Ended State               Properties Leased    Square Feet  June 30,  ^(1) Revenue                                                       2014 Alabama 127        98      % 1,029,300    $ 3,428        1.5        % Alaska 2          100       128,500        307          0.1 Arizona 114        96        1,409,800      5,741        2.6 Arkansas 53         98        782,600        1,655        0.7 California 165        99        5,112,300      22,717       10.3 Colorado 72         99        1,045,400      2,951        1.3 Connecticut 25         96        536,900        2,281        1.0 Delaware 17         100       78,300         541          0.2 Florida 320        99        3,363,700      13,555       6.1 Georgia 233        98        3,029,200      9,428        4.3 Hawaii --         --        --             --           -- Idaho 12         100       87,000         433          0.2 Illinois 160        99        4,406,500      12,681       5.7 Indiana 106        99        1,172,800      5,271        2.4 Iowa 35         94        2,751,700      3,326        1.5 Kansas 82         99        1,638,200      3,443        1.6 Kentucky 56         98        902,200        3,131        1.4 Louisiana 87         98        944,300        2,786        1.3 Maine               9          100       126,400        837          0.4 Maryland 33         100       772,000        4,203        1.9 Massachusetts 83         96        758,000        3,425        1.5 Michigan 106        98        1,009,400      3,285        1.5 Minnesota 155        100       1,153,200      7,350        3.3 Mississippi 121        98        1,551,500      3,800        1.7 Missouri 133        98        2,568,400      8,047        3.6 Montana 1          100       5,400          13           * Nebraska 31         100       708,700        1,750        0.8 Nevada 22         95        413,000        1,289        0.6 New Hampshire 20         100       320,100        1,467        0.7 New Jersey 66         98        562,900        3,350        1.5 New Mexico 29         100       277,400        638          0.3 New York 87         95        2,203,500      10,587       4.8 North Carolina 149        99        1,508,100      5,689        2.6 North Dakota 7          100       66,000         118          0.1 Ohio 213        98        5,058,200      12,118       5.5 Oklahoma 124        99        1,583,700      3,814        1.7 Oregon 25         100       525,400        1,844        0.8 Pennsylvania 147        99        1,800,600      7,071        3.2 Rhode Island 4          100       157,200        929          0.4 South Carolina 134        99        1,011,100      4,389        2.0 South Dakota 11         100       133,500        244          0.1 Tennessee 194        96        3,005,500      5,946        2.7 Texas 434        98        7,801,800      21,387       9.7 Utah 13         100       749,000        1,337        0.6 Vermont 6          100       100,700        492          0.2 Virginia 140        97        2,628,600      6,979        3.2 Washington 38         100       415,300        1,575        0.7 West Virginia 12         100       261,200        883          0.4 Wisconsin 43         95        1,481,600      2,693        1.2 Wyoming 3          100       21,100         63           * Puerto Rico         4          100       28,300         149          0.1 Totals\Average      4,263      98      % 69,185,500   $ 221,436      100.0      % *       Less than         0.1%         Includes rental revenue for all properties owned by Realty Income at June         30, 2014, including revenue from properties reclassified as discontinued ^(1)    operations of $18. Excludes revenue of $44 from properties owned by         Crest and $406 from sold properties that were included in continuing         operations.  Logo - http://photos.prnewswire.com/prnh/20130507/MM09486LOGO  SOURCE Realty Income Corporation  Website: http://www.realtyincome.com Contact: Paul M. Meurer, Executive Vice President, Chief Financial Officer & Treasurer, (760) 741-2111 ext. 1109  
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